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The phpinfo.php file above is a completely new file you need to create ... forget about any existing files you may currently have.
Just create a brand new file called phpinfo.php (as above) and upload/ftp it to your host/server. Put it in the same place as your index.php file (or index.html) then goto http://yoursite.com/phpinfo.php

Yes, but you need to find out why you are having this problem.
A <?php phpinfo() ?> file will show you all your PHP/Apache settings, some of those are related to uploading files, you need to check them to make sure there's no predefined file size limit.
If you do what i suggested above and view http://yoursite.com/phpinfo.php you'll see what i mean.

The .htaccess goes where you originally had it (where you PHP files are .. index.php etc) not in /etc/lib
But it looks like your host doesn't allow you to upload files over 8M to prevent people uploading massive files and clogging up their server.